California Cases to Watch in 2019

Fenwick securities enforcement co-chair Michael Dicke spoke with Law360 about SEC v. Blockvest, a cryptocurrency case that could provide further guidance to a number of novel legal questions.

A November 2017 California federal court ruling in the case found that the SEC had not demonstrated that $2.5 million in tokens Blockvest offered to 32 purported "test investors" ahead of an expected $100 million ICO were securities subject to securities laws—and that discovery would be needed. However, that does not mean the court ruled that this token is not a security, Dicke told Law360.

“The courts, on these facts as they're presented on the papers, found that the SEC didn't meet its burden of proving that what was offered was the security,” Dicke, formerly the head of enforcement for the SEC’s San Francisco regional office, said. “Now, you know, that doesn't mean that that once all the evidence is in that they might not meet that burden. But right now, it doesn't.”​

That said, this early ruling does signal the possibility of interesting future rulings in the cryptocurrency space and beyond.

“It points to this almost metaphysical distinction,” Dicke said. “When people say, ‘Is something a security?’ it's not the right question. It's the way it's often marketed that can make a security. You look at how the [token] is being offered.”